I've retired, what now?

GUIDE: THE MOST IMPORTANT FINANCIAL DECISIONS YOU'LL NEED TO MAKE

- Jaco Fouché

Over the past few weeks, I have discussed the financial aspects to consider before retirement. Retirement is a major life milestone and at this stage, it is important to make good financial decisions to ensure long-term security and comfort.

Below is a guide to the most important decisions you will need to make and their implications:

1. Lump sum withdrawal and tax implications

One of the first decisions at retirement is whether to take a lump sum and how much. Pension funds and retirement annuities allow you to take up to one-third of your savings as cash.

When you decide to take a lump sum, it is important to understand the tax implications. In South Africa, the first R550 000 you withdraw is tax-free over your lifetime. Anything above this is taxed as follows:

• R550 001–R770 000: R0 + 18% of the amount over R550 000

• R770 001–R1 155 000: R39 600 + 27% of the amount over R770 000

• R1 155 001 and above: R143 550 + 36% of the amount over R1 155 000

The following need to be considered when taking a lump sum: